Greater New Orleans

U.S. auto sales come on strong in November

DETROIT -- People are finally replacing the cars and trucks they held on to during the economic slump, giving a big boost to U.S. auto sales in November.

Associated Press archivePam Bialecki works on a 2012 Jeep Wrangler at the Chrysler Toledo Assembly complex, in Toledo, Ohio. Chrysler said Thursday that its U.S. sales jumped 45 percent last month thanks to strong demand for the Jeep brand.

Chrysler, Ford, Nissan and Hyundai were among the companies reporting double-digit gains from last November, which is normally a lackluster month because of colder weather and holiday distractions. This November, buyers were lured by good deals, improving confidence in the economy and the need to trade in older cars.

"Consumers are just starting to say 'it's time to start spending money again,' " says Larry Dominique, executive vice president of data for the TrueCar.com automotive website.

An early blitz of holiday advertising helped convince some people that it was a good time to buy. Ken Czubay, Ford's vice president for U.S. sales, says dealers saw the same rise in sales that other merchants did on Black Friday and the Saturday after Thanksgiving

Several analysts expect the pace of U.S. auto sales to be the fastest in more than two years. They project the annual rate for November to range between 13.3 million and 14 million cars and trucks after carmakers finish reporting new vehicle sales Thursday. That's a far better rate than the 12.6 million through the first 10 months of the year.

Sales could even approach the 14.1 million annual pace from August of 2009, when the government offered big rebates for drivers to trade in their gas-guzzling clunkers.

Car companies expected sales to improve as people who held on to cars during the economic downturn return to the market. The average age of a car on U.S. roads is a record 10.6 years, according to Polk, an auto industry research firm. And the rate of cars that are scrapped has surpassed sales for several years.

"There were a lot of people that waited quite a bit of time to get a vehicle," says Ryan LaFontaine, whose Michigan car dealer chain sells 16 foreign and U.S. brands. He says commercial truck sales were strong during the month.

A better selection of cars at Toyota showrooms also brought more shoppers back into the market. Many buyers spent the summer waiting for those inventories to improve after the March earthquake and tsunami in Japan squeezed supplies, says economist Jenny Lin, who works for Ford Motor Co.

Toyota's sales rose 7 percent for the month, the first time the company has seen a year-over-year increase since April. Sales of the subcompact Yaris more than doubled. Sales of the Prius hybrids -- which now include the original car as well as the new Prius V wagon -- were also strong.

But Honda Motor Co. continued to struggle, partly because of flooding in Thailand that forced the company to slow down U.S. production. Honda sales fell 10 percent for the month.

Chrysler Group LLC's sales rose 45 percent from a year earlier. They were led by the Jeep Compass small SUV, which had a nearly ten-fold increase in sales. Jeep brand sales rose 50 percent, while Chrysler brand sales nearly doubled on strong demand for its 200 and 300 sedans. Chrysler raised its incentives to nearly $3,300 per vehicle, up 6 percent from October.

"We are seeing a broad spectrum of customers return to the market," says Don Johnson, GM's U.S. sales chief. GM's overall sales were up 7 percent.

Ford's sales rose 13 percent, fueled by the new Explorer SUV, whose sales more than tripled over last November.

The increases reflect improving consumer confidence, which rose to its highest level since July last month, according to the Conference Board.

Attractive leases also spurred sales. Dealers offered good terms because low interest rates and high used-car values make leased vehicles worth more when they're returned. GM, for instance, is offering a Cruze lease at $169 per month for 39 months.

According to TrueCar.com, an auto pricing site, the average industry spending on incentives such as leases and low-interest loans was $2,534 per vehicle in November, up 2.5 percent from October.

Jeremy Anwyl, CEO of the auto information site Edmunds.com, estimates that 200,000 to 300,000 buyers who held off purchases over the summer and are coming back to the market now. But he thinks sales could soften this spring once those buyers are exhausted.

"I wouldn't view this as suggestive of a fundamental economic rebound," Anwyl says. Instead, he expects the recovery to continue the bumpy progress it has seen all year.

Other automakers reporting Thursday:

Nissan Motor Co. says sales were up 19 percent. The new Versa small car led sales with a 38 percent increase, but SUV and truck sales also rose 32 percent.